Northwest Arkansas Democrat-Gazette
GE power unit to lose 12,000 jobs
Company cites renewables, fast evolving energy market
MICHELLE CHAPMAN
NEWARK, N.J. — General Electric Co. will cut 12,000 jobs in its power division as alternative energy supplants demand for coal and other fossil fuels, and energy demand declines overall.
The company said Thursday that the cuts to both office and production jobs will help “right-size” GE Power in a traditional power markets that are being upended globally.
The cuts, representing 18 percent of all jobs at GE Power, will take place largely outside the U.S. Many will be in Europe, where other energy companies have already announced reductions.
GE plans to cut 1,400 of its 4,200 positions in Switzerland over the next two years. While no facilities are expected to close in Switzerland, the company said the GE Power Conversion unit in Berlin and GE Grid Solutions in Monchengladbach, Germany, would be closed. GE plans to trim its German workforce by 1,600 positions.
Other German facilities that may be affected are in Mannheim, Stuttgart and Kassel, the company said.
The move adds to a flurry of cost cuts by Chief Executive Officer John Flannery, who already has scaled back use of corporate jets and delayed work on a new Boston headquarters since taking the reins in August.
GE had about 300,000 total employees at the end of last year. Power was the company’s biggest division, with sales last year of $26.8 billion. The total would have been $36.8 billion after accounting for the effects of a reorganization this year in which GE added some energy businesses to the unit.
The shifting dynamics are roiling the huge conglomerates that serve the industry. Siemens, GE’s main rival, said last month that it was cutting 6,900 jobs worldwide in units focused on power-plant technology, generators and large electrical motors. In making the announcement, Siemens said that “the power generation industry is experiencing disruption of unprecedented scope and speed.”
The GE employees losing
● their jobs will be notified about whether they are being let go over the next 18 months.
Positions in France won’t be affected because of stipulations in an agreement when GE bought Alstom’s energy business in 2015, according to a person familiar with the matter.
The power unit expanded considerably with the $10 billion Alstom acquisition, but the drawn-out deal has turned into a drag. Intended to broaden the product lineup with steamturbine technology, the tie-up pushed GE Power’s workforce to 65,000 at a time when the market was slowing.
Power companies are moving away from coal because of environmental regulations that are in place or anticipated, and for economic reasons as well. The cost of cleaner burning natural gas, solar and other alternative energies continues to fall.
That has had an enormous impact on workers in the power-generation
industry.
Data released by the Bureau of Labor Statistics in October suggest the top-growing job classification over the next nine years will be solar photovoltaic installers. Wind-turbine service technicians came in at No. 2.
Most power generation in the U.S. is still derived from fossil fuels, but the balance is shifting.
President Donald Trump’s administration has promised to bolster nuclear and coal-fired power plants, even though those facilities are being retired at a steady pace.
A number of former federal energy regulators have come out against the administration’s plans, calling it a step backward.
Changing habits have reduced the power that is consumed in most households, as has more efficient technology.
GE said that reducing the number of positions, along with actions previously taken this year, will help GE Power, based in Atlanta, trim costs by $1 billion next year. GE is looking
to reduce overall structural costs by $3.5 billion in 2017 and 2018.
“This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services,” Russell Stokes, chief executive officer of GE Power, said.
GE announced in November that it was slashing its dividend in half and that the conglomerate would narrow its focus to three key sectors — aviation, health care and energy. The company has said it will shed assets worth more than $20 billion in the next couple of years. It’s been paring businesses for over a decade now.
Although GE estimates that its equipment generates more than 30 percent of the world’s electricity, analysts at Stifel wrote in a note to clients on Thursday that a streamlining of the power division was “long overdue” and an “obvious next step” to improve the company’s cash flow and profit margins.